In a minor decision this week, Judge Denise Cote limited the state statutory penalties Apple faces after being found liable for conspiring with five major publisher to fix e-book prices at its June trial. While Apple remains on the hook for damages, as well as some state penalties, Cote’s ruling will likely knock a little off the final amount Apple could eventually be ordered to pay.
In her decision, Cote held that Apple could be held liable for state penalties under any state statute “congruent” with section one of the Sherman Act, and the case litigated at trial. But, “to the extent that a violation of a state statute…requires proof of an element beyond that of Section one of the Sherman Act,” she held, “Plaintiff States' claims for civil penalties under these state statutes will be dismissed.” With the trial record now closed, Cote said the court would “make no further factual findings” necessary to establish additional state penalties.
In addition, Cote’s order defined Apple’s liability as determined at trial as “one violation,” which also limits Apple's exposure. If assessed, the state penalties would add only nominally to Apple’s final payout. According to an appendix submitted by the states, penalties in some states are limited to as little as $2,000 per violation, and capped at $1 million in many others.
Apple is still liable for a big number when it comes to damages, which are scheduled to be determined at a May, 2014 trial.
Meanwhile, the order also suggested there is ongoing friction between Apple and the states and consumer class over collateral estoppel: that is, the degree to which Apple's liability as determined at trial translates into liability for monetary damages in the state and consumer actions.
Apple is fighting hard to limit its liability, as one would expect. In her order, however, Judge Cote pressed again for the two sides to agree on a stipulation of liability. If such a stipulation cannot be reached, however, as seems likely, then briefings on the liablility aspect are due by March 7, 2014.